I've put these temperature sensors in small copper tubes (about 3/16...just big enough to encompass the housing) and epoxied them for environmental sealing.....they seem to respond almost instantly to increased temperature from holding them between fingers.....so I don't think the lag on temperature measurement is going to be a problem. You will have to have one hell of a heater unit to match temperature rise with water flow. This is especially true if your water temperature changes with the seasons as ours does here in Boise, Idaho.....
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